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Anime - The Perfect Video Rental

By Oliver Chin
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Reprinted with permission by the author

The US home video market is a $16 billion industry. Its trade magazines highlight anime annually as its popularity and profitability increase. More titles by more publishers garnering more shelf space. However, despite video publications' self-serving advertorials, most video retailers have not built extensive anime sections or a customer base.

Here is comic retailers' key advantage - existing and growing legions of fans. Many comic retailers sell anime. But allowing your buyers of comics, graphic novels, and merchandise to rent video could be even more rewarding. Imagine the windfall: your patrons have increased freedom to experiment at lower cost and higher convenience and become more loyal. Then hopefully you would get a rental and a sale too.

Get the Best POS

The first major step is to buy an efficient Point of Sales (POS) system. Suitable POS software must meet minimum requirements:

Note that certain companies charge more for extra modules, like label printing, or managing rentals for other products such as music CDs, video games, and DVDs.

Information is Power (and Profit)

Beyond the obvious benefit of automated control (your file cabinet can't communicate with your cash register), should you pick the cheapest rental system?

Well, POS systems aren't necessarily cheap, starting out around $800 for one station and $500 more for a 2nd terminals (excluding all the related merchandise). There already is a customized package for comic retailers. Mark Crane of Lee's Comics (Palo Alto, CA, 650-571-1489) recommends the video rental component that's included in ComTrak. This ordering/POS software is used by +600 comic and game retailers and was created by the comics consultant Mel Thompson, who noted an increasing number (20%) use the rental feature.

"It's great. We're almost as slick as a Blockbuster," Mark states. "It's been a lot easier for us to have a wider selection. Plus having more cash come in from rentals encourages reinvestment for even a wider selection." Lee's is "the only place on the (Bay area) peninsula" with such a large library (+200 VHS, 25 DVD), and garners $1,500/month in rentals and $100 in late fees. Lee's charges $3 for a 2 day rental and has only lost 2 tapes over 2 years for two store locations. Mark cites that "it took about 6 months to get rolling and you don have to spread the word" but Lee's anime rentals have generated enormous returns.

POS is a database tailored to improve your customer service and operational efficacy. Mine it for market analysis: get reports that you never had before to improve your business. For example:

Transactions per hour or day. Build traffic on slower periods. Give incentives for early returns (ex. "Matinee" credit for next rental). You not only encourage Customer A to rent again but also get stock ready for Customer B.

Customer demographics. Give better customer service by knowing customer preferences. Send them direct mail, suggest "store specials", and upsell other interesting titles. Plot where your customers live and who the best ones are.

Renting leverages other strengths, such as location. Stores that could maximize rental success are near schools. Colleges teem with anime clubs, and students who lack huge allowances or personal storage space. They are perfect patrons who have been conditioned to rent movies while at home. A retailer near the University of California Irvine (UCI) bought all the anime from the campus store when it closed. By continuing the tradition of video rentals, it soon acquired many of its customers as well.

Now with Internet delivery of DVD improving the convenience of the rental experience, comic retailers should be even more motivated to serve their customers better, or else lose them to increased competition.

The following companies sell POS software for retailers whose primary business is video rental and sales. You can research them at the annual convention of the Video Software Dealers Association (www.VSDA.org). Comic retailers can quickly benefit from helping their clientele develop consistent rental habits. This is a vital means to induce regular traffic, evaluate your business, and serve your customer base.

* A brief review of the Rentrak video rental system. Rentrak is a revenue sharing arrangement with 6 of the 8 major movie studios (in a Pay per Transaction (PPT) system). Retailers can buy VHS at a lower initial unit cost ($3.00-$8.30) but they get less revenue per rental (45-65%, decreasing over the period of the lease which is from 6-12 months). PPT allows retailers to provide more copies per title for first 30 days of a release (known as "copy depth"), while returning rental profits back to the studios.

This purportedly reduces retailers' risk and improves their cash flow (less initial investment tied up in inventory) and they can sell the tapes at the end of the lease. But the monthly access fee (minimum $40), plus each title's total revenue sharing cost ($22-35) over its rental lifetime makes Rentrak not a viable option for comic retailers, since anime usually retails for less than $30.